Silver Investing: Now Is the Time to Buy the Metal and Mining Stocks

Silver was knocked down to below $11 an ounce recently, apparently dragged down by falling oil and efforts to strengthen the dollar (alleged by some to be pre-election manipulation to keep voters happy). But the fundamentals of silver point to a much higher price potential. Global silver inventories are down. Millions more ounces of silver are being consumed industrially than are being produced, and production of silver from mines is difficult to increase – partly because silver tends to be a byproduct from mining of other metals, and if their demand does not increase dramatically, there is little motivation to ramp up silver production.

A huge reason to expect silver to rocket upward in the near future is the emergence of new hedge funds devoted to silver. Barclays of England brought the SLV exchange traded fund online this year for American investors, and now more such funds are planned for Europe, Australia, and New Zealand. Investment demand for silver can be expected to escalate as it finally becomes easy to invest in, and as people recognize it as protection against inflation. But the key dynamic is that silver is rare, being used up steadily for industrial needs. In fact, it is rarer than gold in terms of available physical silver above ground. But it’s an a ridiculously low level of around 1/60th the price of gold, when historically it’s been at 1/16 or higher – a logical price given the relative amounts present in the earth’s crust.

What all this means is that today, this month, perhaps this year, you have a marvelous window of opportunity to invest in silver. Get the real physical metal, get some SLV exchange traded fund in your 401(k), and get some silver stocks such as Sliver Wheaton (SLW) or Silver Standard Resources (SSRI). If you want a speculative junior mining company (for advanced traders only), try Clifton Mining (CFTN.pk) or Sterling Minerals (srlm.ob).

About Jeff Lindsay

Jeff Lindsay lives in Shanghai but has roots in Utah and Wisconsin. His interests include China and Chinese (the language and the food), intellectual property, chemical engineering, magic (a hobby), reading, writing, travel, photography, and his LDS faith.

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